Re: I don't see the problem
Yes, you've got the wrong end of the stick.
This is absolutely not about getting India online. This is about getting a "free" service in there that will inevitably be popular with people who are too poor for regular paid internet and/or don't see the problem with "internet == FarceBork". But for those who do want "proper" internet, and the ISPs providing it, it means those providers have to compete with 'free".
To see what that means, just take a little look back in history. Once upon a time Microsoft made a mediocre browser called Internet Explorer, and in their usual way tried to make "the web" into "the Microsoft web". There was a competitor called Netscape Navigator. Both were originally paid for products.
Microsoft didn't like this competitor - not least because it threatened their attempt to proprietise the web. They started giving away Explorer - free, "no strings attached". Of course, Netscape didn't have a cash cow of Windows to pay for things, and eventually Navigator all but disappeared. After that, with no competition, Explorer festered. Microsoft could get away with plying a pile of steaming poo because no-one else could compete with free.
It was only later (IIRC) some years that other alternatives popped up - and eventually people started realises just what a pile of poo Explorer was.
The analogy here is that FarceBork want to do for internet access what Microsoft tried to do for "the web". A big difference is that running an ISP takes real money - other than niche community projects, you don't run one of those as a no-cash open source development !
Of course, as we all know, the EU eventually (about a decade too late when the damage was well and truly done) found Microsoft guilty and imposed a penalty that was barely a slap on the wrists while simultaneously annoying users ! With this judgement, it's clear that the Indian authorities have realised that it's better to prevent the market abuse in the first place than to try and repair the damage afterwards.